Tuesday, May 24, 2011

Low Cost Country - First Thoughts

One of my function at work is being the suggestion box (or the punching bag) for those people who would like to vent about something, anything. Something I hear over and over again, not only in my current position but in all of my previous occupations including the experience of operating an international trading business is the rumor that outsourcing to Low Cost Countries (LCC) do not work well.

LCC makes a whole lot of sense for its "obviously" lower cost in labor, the time difference so work can get done in LCC while people are sleeping here, and companies can concentrate on developing and keeping its core competencies in-house. The pool of talent isn't terrible at the LCC either: there are plenty of people with an American education (Masters and/or PhD). I truly believe that (majority) people don't goto work each day thinking of how to sabotage the companies they work at, so why does LCC earn such a bad name?

The complaint I hear often from people are: "yes they're cheaper, but they take twice as long to do the work," or "they did the work wrong the first time, the second time, and they still didn't get it right the third time," or "I can't talk to them, they don't understand what I want." These complaints almost always has to do with the break down in communication or an expectation not satisfied (a gap), and not the fact that the work is being done outside of the company. This is not so different from the "just throw it over the wall" mentality existing inside a company. Ever point to an engineer and say "this design is all wrong" and have him reply in return "you're just not building it right." Ever point to a buyer and say "you bought the wrong parts" and have him reply in return "then you must have given me bad info."

 To me, improving the working relationship with LCC's is a golden opportunity because if you're able to figure out how to work with LCC's efficiently, you'll be ahead of your competition. Another way of saying it is, if your competition figures out how to provide an end product faster and cheaper to the customer than you, you're going to be in deep trouble.

HereTryThis: The next time you hear a complaint about working with a LCC, first understand if the complaint is objective or subjective. There is nothing you can do about subjective feedback. Objectively if a gap does actually exist, use your favorite problem solving techniques (Six Sigma DMAIC or 8-Step Practical Problem Solving) to find the rootcause and put together a plan to eliminate the gap.

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